Tag Archive for: property division

Real Estate Slump Presents Divorce Complications

When a married couple divorces, the property they own must be divided between the two spouses. Who gets the marital home has traditionally been one of the most contested property division issues in a divorce. Traditionally, the value of a home increases over time and therefore the home would have a large amount of equity that had been built up over the course of the marriage.

However, the economic downturn has had a profound impact on family law. Once robust retirement accounts are worth a fraction of their past value and many spouses have been laid off. Each change in the economy changes how couples need to structure divorce settlements, but the collapse of the real estate market has been an especially difficult issue.

The real-estate bubble has burst and this has changed the way many divorcing couples view their marital homes. With real estate inventory piling up on the market, there is no guarantee that a home would sell in a timely fashion or at a profit. Many homes are worth less than the amount owed on the mortgage and there is no guarantee that a short sale will be successful.

With many homes now seen as a liability instead of an asset, property division is becoming a more complex issue. Divorces that would have been uncontested divorces in the past are now turning into contested divorces. If you are considering or going through a divorce in these difficult economic times, it is important to consult with experienced family law attorney who takes a detailed approach regarding marital property division.

Source: The Star-Ledger, “Today’s real estate market calls for dire divorce decisions,” Sarah Portlock, 12/5/2010

Divorce rates expected to rise during economic recovery

An increase in the rate of divorce in Wisconsin and across the United States may be directly related to a rebound in the economy, according to recent statistical studies and family law attorneys who are now seeing more couples choose to end marriages. During the recession, the overall number of divorces dropped dramatically nationwide. Now that financial conditions have begun improving and stabilizing, more married partners are calling it quits.

The American Academy of Matrimonial Lawyers (AAML) says America, with the world’s highest rate-of-divorce, saw far fewer legal split-ups during the recession years. In 2008, divorces dropped 24 percent. In 2009, divorces were down 57 percent. This is not an unusual pattern, according to the AAML, which said bad economic times traditionally make couples less certain about major changes.

The recession has affected the rate of marriage as well as the rate of divorce. Fewer recession-affected couples choose to marry, have children and break up. A Pew Research poll, taken at the tail end of 2009, found that couples, younger than 35 years of age, decided to wait for better times to get married. Some 15 percent opted to stay engaged a little longer rather than wed and 14 percent held off adding a new child to their families. In addition, many couples who wished to end a marriage decided to stick it out a little longer for financial reasons.

Many couples, who thought about breaking up during the financial downturn, hesitated to separate because of worries over how the economic crisis would affect the division of marital assets. The costs associated with divorcing, including finding separate residences, and falling property values, caused a reluctance to split up.

Source: AFP, “Rising US divorce rate signals economic recovery,” Virginie Montet, 4/29/2011

Consider the tax implications of Wisconsin divorce

It seems natural to consider the tax consequences of financial decisions that we make, but many people overlook the fact that divorce involves making many financial decisions. Unfortunately, that often leads them to overlook the tax implications of their divorce agreement.

Whether you and your spouse are in agreement about nearly everything, or you are involved in a contentious battle, one thing is the same: your divorce will probably impact your taxes. It is important to consider the tax consequences of your divorce so that you can create a fair marital property settlement.

The following are some specific tax sensitive areas that should be considered by people who are considering divorce:

  • Alimony: Did you know that you can deduct alimony that you pay to a former spouse from your taxes? You must meet certain criteria, but this knowledge can make the lessen the impact of needing to pay alimony.
  • Qualified Domestic Relations Order, “QDRO”: A QDRO is a court order that will allow a spouse or former spouse to receive the benefit from the other spouse’s retirement account. Such amounts are included in income for tax purposes, so the receiving spouse must count the payments as income.
  • Divorce costs: Most of the legal fees and court costs for divorce are not deductible. However tax advice and legal fees to acquire alimony may be deductible, so it is a good idea to have a clear breakdown of the amounts you paid in your divorce.
  • Community Property: Wisconsin is a community property state. This means that there are special rules for determining the couple’s income after a divorce.

As you can see, the tax implications of a divorce are rather complex. Wisconsin couples who are considering a divorce, should consult with an experienced family law attorney who can walk them through these issues.

Source: Central Valley Business Times, “Tax provisions for 2011 regarding separation and divorce,” Alan Shattuck, Aug. 10, 2011

Divorcing spouse may be liable for ex

A common question for Wisconsin residents who are divorcing is whether they can be held financially responsible for a former spouse’s credit card debt. The answer may surprise some. Because Wisconsin is a community property state, a credit card company can pursue the cardholder’s spouse for credit card debt even if the spouse is not a joint account holder. The spouse is presumed to be jointly liable for the debt unless he or she can prove otherwise.

In a divorce decree, the court divides the former couple’s assets and debts between the two parties. If one spouse was incurring credit card debt without the other spouse’s knowledge and without the other spouse benefiting in any way from the expenditures, the court should be so advised. The judge likely will take these circumstances into consideration when allocating debt between the parties, particularly if the expenditures contributed to the end of the marriage.

Even though the court may allocate the credit card debt to one spouse as part of the property division, this may not get the other spouse off the hook for the debt as far as the credit card company is concerned. The court does not have jurisdiction over agreements the parties may have with third parties, meaning a creditor may try to collect from one spouse if the other does not pay, regardless of what the divorce decree says. Accordingly, it is important to make sure the credit card debt is paid off as a condition of the divorce settlement.

In the event that one spouse has incurred significant debt, the other spouse should take certain steps before divorce. First, document the status of all accounts held by the couple, including credit cards, mortgages, bank accounts and the like. Second, obtain a credit report to ensure there are no other unknown accounts. Close as many joint accounts as possible, making sure to comply with any conditions imposed by the divorce court first. Finally, a spouse may also want to consult with an experienced divorce attorney.

Source: Fox Business, “Is Wife Liable for Ex’s Card Debt?“, Sally Herigstad, May 07, 2013

More common for wives to pay alimony

Wisconsin residents might be interested to hear that it is becoming more common for wives to be ordered to pay alimony to their ex-husbands in divorces. Husbands and wives do not necessarily have the stereotypical marriage arrangements that they used to have in the past. Traditionally, wives stayed at home while the men were the primary breadwinners. Now, however, wives may be the primary breadwinners, or both spouses may earn income equally.

Alimony was originally designed to allow the spouse who stayed at home to care for the home and children to continue living in the lifestyle he or she had become accustomed to. Traditionally, the woman was the one who received alimony from her husband during a divorce. With studies reporting that over 40 percent of the wives who work earn more than their husbands, that trend is beginning to shift. This makes it so that some husbands are, in fact, receiving alimony from their wives rather than the other way around.

Experts say that many women, like men, do not like having to pay alimony to their ex-husbands. This is especially so in cases where both the husband and the wife worked, but the wife simply earned more than the husband. Some people are advocating for the removal of alimony altogether in an attempt to make divorces as de-genderized as marriages are becoming.

Family law lawyers may be able to help people who are going through the divorce process ensure that they receive a divorce settlement that is in their best interest, and they may be able to help a couple negotiate issues such as alimony, property division, child custody, child support and other divorce matters throughout divorce proceedings.

Source: TIME Ideas, “The De-Gendering of Divorce: Wives Pay Ex-Husbands Alimony Too Read more: http://ideas.time.com/2013/05/16/the-de-gendering-of-divorce-wives-pay-ex-husbands-alimony-too/#ixzz2TrG4sEau“, Liza Mundy, May 16, 2013

The ins and outs of prenuptial agreements

Some married couples in Wisconsin may not have prenuptial agreements. Given that nearly half of all marriages end in divorce, however, someone who is about to enter into matrimony may wish to consider getting one. Indeed, prenuptial agreements are becoming increasingly common, especially for people who are entering second marriages and for those who are getting married later in life.

A prenuptial agreement is a legal contract signed before marriage that sets out the future spouses’ understanding regarding which assets will become part of the marital estate and how property division will be handled in the event the couple later splits. When drafting a prenuptial agreement, one should keep in mind that full disclosure of all assets and liabilities is crucial to the agreement’s future enforceability. If one party to the agreement failed to disclose all of his or her assets or debts at the time the agreement was signed, a court later may refuse to enforce the agreement on the basis of fraud.

When drafting a prenuptial agreement, the parties may consider including a sunset clause. Such a clause provides that the agreement becomes void and no longer enforceable after a certain period of time or the occurrence of an event such as the birth of a child.

It is important for each party to a prenuptial agreement to have their own lawyer to negotiate on their behalf and to represent their separate interests. If a prenuptial agreement contains lopsided provisions that unfairly advantage one party over the other, it is vulnerable to subsequent challenge. A lawyer also can help ensure that the agreement meets the court’s standards. For example, celebrity couple Steven Spielberg and Amy Irving had a prenuptial agreement that was drafted on a napkin. When they divorced in 1989, the court ruled the agreement was invalid and awarded Irving $100 million. Had Spielberg consulted with an experienced family law attorney about the agreement, he may have obtained a better result.

Source: Huffington Post, “Prenup Tips: ‘Fox And Friends’ Tackles Prenuptial Agreements“, July 18, 2013

Infidelity and divorce

Allegations of infidelity have sounded the death knell for many Wisconsin marriages. While some spouses may be willing to forgive an indiscretion, others are unable to move beyond the negative emotions and hurt caused by a spouse’s unfaithful behavior. In those cases, divorce may be the only option. However, infidelity may not play any role in a divorce proceeding depending upon state law.

Many states have no-fault divorce laws, and a spouse who is seeking a divorce need not prove that the other spouse did anything wrong to cause the marriage to end. In most such states the court will not consider a history of infidelity or other bad behavior by one or both spouses in determining issues such as property division, child support or alimony.

In many no-fault states the court will base child support on statutory guidelines that consider the parties’ incomes and the children’s physical placement, not who was to blame for the marriage’s demise. In determining whether to award spousal support, the court will look at factors such as the length of the marriage and earning capacity of the parties, not whether one party was unfaithful. However, if a spouse’s bad behavior affects or endangers the well-being of the children, the court may factor it into its consideration of a child custody dispute.

Someone contemplating a divorce may wish to speak with an attorney that is experienced in family law matters. The attorney may be able to negotiate and prepare agreements relating to such matters as property division and spousal support. If there are children from the marriage, the attorney may be able to provide advice and counsel on such issues as child support and visitation rights.

Source: HuffingtonPost, “A Cheating Heart and Its Role in Divorce“, Caroline Choi, October 01, 2013

New study of old data indicates divorce is contagious

Recently-released results of a study reveal that the marriages of couples in Wisconsin and elsewhere may possibly be affected by divorces of friends or close family members. Researchers at Brown University have found that when a family member or close friend gets divorced, study participants were 75 percent more likely to get a divorce, and 33 percent more likely to end a marriage if a friend of a friend was divorced.

The study of residents of Framingham, Massachusetts, commenced in 1948 and was initially designed to examine risk factors associated with heart disease. It was subsequently expanded to include close friends and family members, with the participants being periodically re-interviewed. The divorce results are attributable to a phenomenon that sociologists have termed “social contagion”, defined as the spread of behavior and attitudes among friends, family members and social networks. It has been found to be present in studies dealing with subjects as varied as childhood obesity and the spread of imaginary workplace diseases.

Study results also showed that a divorced person is more likely to remarry another divorced person, especially if the remarriage occurs shortly after the breakup of the previous ones. Participants who divorced often felt that they were less popular, losing the connections to friends that had been part of the other spouse’s social network.

When marriages cannot be repaired, sometimes a divorce may be the way for spouses to get a new start on their individual lives. An attorney who has experience in family law may be able to assist someone contemplating the termination of a marriage by helping to negotiate and prepare agreements covering issues such as property division and spousal support.

Source: Pew Research Center, “Is divorce contagious?“, Rich Morin, October 21, 2013

Prenups becoming more popular

According to U.S. census data, as many as 50 percent of marriages end in divorce. An increasing number of couples in Wisconsin and across the country are turning to prenuptial agreements as a way to resolve issues ahead of time should their marriages end in a divorce.

The American Academy of Matrimonial Lawyers reports that more than 60 percent of divorce attorneys who responded said that they have seen an increase in prenuptial agreements during the last three years. Additionally, 46 percent of these attorneys said that they have seen a significant increase in women requesting these types of agreements. Historically, men were more likely to be the ones requesting these agreements as they tended to have more assets to protect. However, as an increasing number of women enter the workforce they have more property than before. Additionally, people are likely to be more aware of the financial complications of death and divorce, making them more likely to enter into these agreements.

The three primary reasons that individuals enter into prenuptial agreements are the protection of separate property, spousal maintenance and property division. Many advisers recommend talking about a prenuptial agreement early in the relationship rather than bringing up the idea right before the wedding. It is suggested that couples discuss whether they will maintain joint or separate bank accounts, how expenses will be divided and paid for and who will stay in the marital home in the event of a divorce.

Couples going through a divorce often have disputes about the valuation or ownership of assets that may hinder reaching a property division settlement. A prenuptial agreement may be a possible way to help resolve this type of issue in advance.

Source: Pittsburgh Post-Gazette, “More couples saying ‘I do’ to prenups“, Time Grant, October 31, 2013

Who gets custody of pets in a divorce?

Many people in Wisconsin and all across the nation consider their pets to be members of their families. Some couples, especially those without children of their own, may view their pets like children. Therefore, when they go to get a divorce, questions might arise over who gets custody of the pets.

Although individuals may view their pets as family members, the courts do not. For property division purposes, pets are viewed as marital assets. Therefore, judges will follow the same guidelines when deciding who gets to keep the pets as they do with who gets other marital assets like furniture, vehicles and other possessions.

More divorce lawyers have reported an increase in the number of pet custody cases being filed in court. Consequently, more judges are beginning to take a more open-minded approach to deciding who gets to retain custody of the pets after a divorce. One factor that a judge might consider when determining who gets to keep pets is who will be able to offer the pet the most love, time and attention and what will be in the long-term best interest of the pet.

Just like child support cases, individuals can present evidence and testimony to prove to the court why it is best for the pet to remain in their custody. Issues that they might address are whether they have the financial means to support the pet, whether their ex has ever been neglectful of or abusive towards the pet, whether their work schedule is flexible enough to accommodate the pet’s emotional and physical needs and whether they retain custody of children who are emotionally attached to the pet. In some pet custody cases, visitation, shared custody and pet support payments are established by the courts.

Source: The Huffington Post, “Who Gets the Family Dog After Divorce?“, Nancy Kay, November 10, 2013